Council Passes Short-Term Rental Tax, Puts Airbnb Regs on Ice Until After Thanksgiving

Council members Lisa Herbold and Rob Johnson, on opposite sides of the short-term rental debate.

After several hours of discussion and a number of convoluted parliamentary procedures, the city council voted this afternoon to impose a new tax on people and businesses that provide short-term rental housing through online platforms like Airbnb—$14 per night for an entire home, and $8 a night when the rental is a single room in a larger residence. They did not resolve a key question about the underlying legislation, which would limit each short-term rental operator to just two units, down from an unlimited number today—namely, how many existing units would be exempt from the new requirements. (The legislation, as written, would exempt existing short-term rental units in parts of downtown, Lower Queen Anne, South Lake Union, and some units on First and Capitol Hill.) Council member Rob Johnson argued that it made little sense to adopt the tax without knowing how many rental units it would apply to (and therefore how much revenue it could generate); others, including council member Kirsten Harris-Talley, argued that delaying the vote could give lobbyists for companies like Airbnb time to pressure community groups into supporting their preferred version of the legislation.

Ultimately, the council put off, for at least two weeks, several amendments that would raise or lower the number of existing short-term rental units that would be exempt from the two-unit restriction. On one end of the revenue-vs.-regulation axis, Johnson suggested exempting all existing short-term rental units from the new two-unit limit; on the other, council members Lisa Herbold and Mike O’Brien proposed requiring short-term rental operators who currently rent out several or many units to reduce their rental stock to two or less, with no location-based exemptions. (O’Brien, along with Sally Bagshaw, also offered a middle-ground amendment that would restrict the area in which short-term rental operators could continue to have more than two units to a small area of downtown).

The big-picture question today, as it has been since the city began discussing how to regulate short-term rentals a couple of years ago, was whether short-term rentals remove affordable housing units from circulation in sufficient quantities to drive up housing prices. Advocates argue that they do, but come armed mostly with anecdotes, not data—for every story about a person who got priced out of their old apartment only to see it turned into an Airbnb, there’s one about a homeowner who was able to pay her mortgage by turning her kid’s old room into short-term lodging for a few days every month. The point is—we just don’t know, and arguments that rely on anecdote and correlation-causation fallacies (2,000 people had to move last year because they couldn’t pay their rent and the number of Airbnbs increased; therefore, Airbnbs caused the displacement) aren’t convincing.

For one thing: The total supply of housing in the city has increased faster than the number of short-term rental units—an important factor for people making supply-side arguments against short-term rentals to consider. For another: Many Airbnbs are rooms in people’s homes, and there’s little evidence to suggest that people who want to rent their spare room out a few nights a month would be just equally eager to take on a full-time roommate if Airbnb were not an option. (The difference between a tourist who comes home late at night and a roommate who’s always underfoot is self-explanatory). And for still another: Airbnbs serve the same function as hotels; that’s who the company is competing against. Shutting down Airbnb or dramatically reducing the number of short-term rentals in Seattle would only increase demand for hotel rooms—and hotels are single-purpose buildings that can’t be easily adapted to serve as permanent rental housing if the economy slows or demand for hotel rooms dries up.

Full disclosure: I stay in Airbnbs almost exclusively, whenever I go to another city where I don’t have friends or family I can stay with. I also live in a building where one of the three rental units is an unregulated Airbnb with random people coming and going at all hours of the day and night. Having seen the short-term rental from at least two angles (and talked to plenty of homeowners who rent out rooms in their houses for extra cash), I think they should be taxed and regulated, but not run out of town. As someone who likes to hit the road every chance I get, my options are generally: Airbnb, or chain motel by the freeway. And when travelers like me stay at chain hotels near highways, or even at corporate hotels in the parts of town where such amenities tend to concentrate (downtown; near convention centers), our money goes to Hilton and Starbucks (or Motel Six and Bucky’s), not local boutiques and coffee shops.